Harbinger brands wannabe US LTE network LightSquared

Harbinger, the wannabe-LTE-wholesaler, has raised another $1.75bn, but still falls short of the $7bn it has agreed to pay Nokia Siemens to build the network over the next eight years.

The wholesaling venture now has a name: LightSquared. Nokia Siemens will build 40,000 LTE base stations, providing coverage to 92 per cent of the US population by 2015, assuming the venture can raise the remaining $2.35bn it needs to pay for the network.

That's just to cover the network infrastructure - the other running costs and the money spent on the various companies Harbinger has acquired along the way isn't included. The new $1.75bn adds to the $2.9bn already raised, but is still well short of the total needed.

"As we build out the network, we will start to generate revenue ... Our contract with Nokia Siemens will be funded by the cash flow generated by the business," the company told Light Reading Mobile. "We'll be raising additional debt and equity to meet that target."

Harbinger's plan, laid out early this year, uses radio spectrum formerly reserved for satellite operations* but now released by the FCC for ground use as an "ancillary component" – which means handsets will need a satellite receiver too. It also means the spectrum is spread around the dial in small chunks, from 1.4GHz up to 2GHz, and that means handsets will have to exhibit remarkable flexibility.

The business plan calls for 40 million of those handsets (or other connected devices), which LightSquared hopes to create by connecting lots of consumer devices and allowing new brands to operate as mobile virtual network operators (MVNOs), as well as providing a wholesale service to existing operators who don't want to build their own LTE (4G) network.

The only US operator which has not already announced plans to deploy LTE is T-Mobile. There seems to be an expectation that a deal will be announced soon, though T-Mobile has nothing to lose by holding off for a while to see how LightSquared develops.

LightSquared may need T-Mobile as much as T-Mobile needs LTE. Handsets for the network will be more expensive than the competition, and LightSquared will need to ramp up production fast to get economies of scale, but it hasn't got the money to fund that and doesn't want to be in the handset-supply business anyway. The company promises announcements on handset manufacturers soon, but unless it can get a customer or two it's hard to imagine any significant manufacturer committing to large-volume production.

Harbinger's plan is audacious: it's a huge leap of faith to believe that a company with a hodgepodge of frequencies and only half the money it needs can really build a nationwide mobile network to compete with the incumbents, but it's nice to think that someone is prepared to make that leap. ®

* Don't worry, this couldn't happen here - Ofcom intends to auction off the "Complementary Ground Component" as we know it, so there's no loophole to exploit on this side of the pond.